If your moving company accepts credit cards, it can be tempting to pay for your move with a card. But most cards have a high interest rate. Financing a move with a credit card can end up costing hundreds of dollars in interest charges alone.
To avoid paying interest, find out if you qualify for a credit card with a 0% promotional rate. This will allow you to finance your move interest-free (as long as you pay off the card before the promotional period ends).
Let’s say the promotional period on the card you sign up for is 18 months, and you spend $2,500. You’d need to make 18 equal payments of $139 per month to pay back the cost of the move. Again, be sure you can repay the balance in its entirety before the promotional period expires. Once it’s over, the interest rate on the card shoots up to its standard rate.
How to finance a move
Moving can be stressful enough, even when you’re not in the market for a relocation loan. Here are a few ways you can make it easier to finance a move:
Check your credit score: Financing a move is less expensive for people with strong credit. If your credit score is less than stellar, don’t stress. There are a few moves you can make to improve your credit score. These include paying down debt or asking for an increase in your credit limit. It’s also worth checking your credit report for mistakes that could be pulling your score down.
Work your budget: Take a look at your monthly budget to determine how much you can easily repay each month. If you can only afford to make small monthly payments, look for a longer loan term or borrow a smaller amount. Extending your loan term will mean you pay more interest overall, but it can keep monthly payments manageable. Missing a monthly payment can damage your credit score — so it’s important to stay within your budget.
Reduce your costs: Before you consider any type of financing, work out how much your move is going to cost. You may be able to reduce the cost by doing things like packing yourself, donating some of your belongings to charity so that your move will weigh less, or shopping around for the right mover.
Rate shop: With so many lenders out there, it makes sense to get quotes from three or four of them to find the right loan to finance your move. You can get quotes for a lot of personal loans with only a soft credit check, which does not hurt your credit score. And even if several lenders need to do a hard pull, it will only count as a single credit inquiry if you do your rate shopping within a two-week period.
View more information: https://www.fool.com/the-ascent/personal-loans/how-to-finance/moving/